Amazon (NASDAQ:AMZN) completed a 20-for-1 stock split on June 6. That had a major impact on the share price of the tech giant. On Friday, AMZN stock closed at $2,447 a share. On Monday, the stock was available to purchase at $125 a share at market close. If someone bought shares in Amazon on Friday and then sold them Monday, they would’ve made a 2% profit.
AMZN stock is down from its peak last fall, and it’s down by 10% since executing the stock split, but it remains one of the strongest companies going.
A stock split is a predetermined event that gives everyone a chance to own shares in highly successful businesses. Retail investors have difficulty getting their hands on these stocks due to their increased share prices. It’s possible to profit from a stock’s rise before its split by buying it beforehand. However, this task is often difficult without proper research and skillset. For AMZN stock, that point has now passed.
However, there are still plenty of reasons you should remain invested. Stifel analyst Scott Devitt concurs with this assessment. He holds a “buy” rating on the stock, with a $190 price target.
Therefore, if you are looking to purchase AMZN stock, it’s a great time.
Why Do You Need to Keep Investing in Amazon?
An excellent track record of growth has made Amazon stock a great investment and is what makes it such an attractive option for many people. Amazon has been a great investment for long-term investors looking for steady growth. They can also invest in Amazon stock if they want to diversify their portfolio and add a new industry.
Generally, AMZN stock is not recommended for short-term traders looking to capitalize on short-term fluctuations and market movements. The stock split was a rare opportunity where scalpers had a field day. However, the stock price does not fluctuate much outside of these one-off events. Also, the overall market movement will continue to impact the overall price momentum.
Many investors should consider buying low and selling high because Amazon’s stock is trading down so much from its peak. Moreover, the company still has incredibly strong earnings that aren’t slowing down despite how you may feel about its stock price.
In particular, investors will be happy with the sustained performance of Amazon Web Services (AWS), its cloud infrastructure unit. Amazon has been the undisputed cloud infrastructure king for a long time, and it’s not showing any signs of stopping that trend. Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), and AWS are making it increasingly difficult for each other in the high-growth cloud infrastructure space. AWS remains at the top due to investment in innovation like Amazon Web Services IoT, which has led to a 33% market share.
Why Is Amazon Down?
Apart from the general macroeconomic conditions, there are other company-specific reasons AMZN stock is down. Last quarter, Rivian’s (NASDAQ:RIVN) stock value plunged and hit its GAAP earnings. That was because Amazon invested in the company, showing off their great relationship.
Amazon has recently begun to fluctuate wildly, but there’s a more accurate picture of the company and its value to investors. Amazon dropped below where it was trading before the 2020 pandemic in May. This is an interesting sign that investors might be losing their confidence in the company. However, it is important to keep Amazon’s positives in mind if you consider abandoning ship.
Amazon’s shipping costs have risen, but the units shipped have remained the same. Its e-commerce rivals are struggling with rising fuel prices, which may partly explain why Amazon was able to reduce its costs despite shipping so much more products. The company has recently expanded its capacity and is now subleasing excess space. It will eventually take up that space, so we should keep an eye out for the company’s plans.
Maintain Confidence in AMZN Stock
Amazon has grown its net income and profits for the past five years. It has also increased its stock price by over 1,000% in the last decade.
In addition, with their rapid growth and market share, it has become one of the top cloud computing providers in the world. Amazon Web Services provides cloud computing services like compute capacity, storage capacity, database storage, and other services that businesses or organizations require to run their operations efficiently.
Amazon’s success has led to increased demand for cloud computing services like AWS, with many companies shifting their workloads from on-premise servers to AWS. This shift is expected to continue in a secular fashion, making the stock a can’t-miss prospect.
If your portfolio is missing AMZN stock, this is the time to strike. And if you already have AMZN stock, it’s time to add to your position.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.